Markets

Rising national gas production in Argentina and peak potential LNG export during the summer months is coinciding with strong winter demand from utilities in Asia. This seasonal dynamic is expected to attract Asian buyers amid very competitive shipping costs.

Over-the counter (OCT) traded gas volumes in European brokered markets amounted to 2,309 TWh in August, up 14% year-on-year. Trading at the Dutch Title Transfer Facility (TTF) rose 13.5% to 1,833 TWh, while German NCG contracts soared 25% to 125 TWh, according to the London Energy Brokers’ Association (Leba).

European utilities are courted by more and more sellers marketing long-term LNG volumes from pre-FID LNG supply projects. To gain access to attractively-prices US LNG, however, European buyers need to turn their back on hub-pricing and open up to Henry Hub-indexation, instead.

Natural gas and wind are the fastest growing sources of U.S. electricity generation, both rising 6% this year. In 2020, gas power will rise another 2% while generation from wind is seen surge 14%, according to the EIA’s latest Short-Term Energy Outlook.

Though Europe’s green energy transition is gaining pace, natural gas demand is seen grow significantly. Wood Mackenzie advises European utilities to share some cross-hub price risk with LNG producers, or else they risk losing market space to international oil companies or state-run energy majors like Gazprom.

Manila Electric Co. (Meralco) has warned the Philippine island of Luzon may face power shortages in the first week of October, when up to 900 MW of gas-fired capacity will be offline for maintenance. Repairs coincide with the four days maintenance shutdown of the huge Malampaya gas field.

The U.S. shale revolution and falling capital costs for renewables are reshaping the power mix both domestically and abroad, the International Energy Agency (IEA) noted. Future production growth and exports will depend on the complementary build-out of oil and gas pipelines, as well as LNG terminals.

By 2030, new-build renewables will outcompete existing fossil fuel generation on energy cost in most regions. According to McKinsey analysts, the northwest of the United States is “the exception with tipping-points post 2035,” due to low gas prices and limited potential for solar photovoltalic.

Drone strikes have reduced Saudi Arabia’s oil output by half which is feared to have reverberations on global energy markets. An increase in oil prices is likely to lead to a corresponding rise in gas and electricity prices, which will be reflected in higher tariffs for customers in the UK and most western economies.

Construction is being fast-tracked on the Thi Vai LNG import terminal and adjacent Nhon Trach unit-3 and 4 power units in the southeastern region of Vietnam. Samsung C&T and PetroVietnam seek to get the integrated LNG-to-Power project on stream by 2022 for an investment of about $286 million.

Gas and variable renewables will be the only energy sources for which demand is higher in 2050 than today. Rapidly falling capital costs for solar photovoltaic will make the technology 25% to 50% cheaper than new gas-fired power projects, DNV GL analysts told Gas to Power Journal.

Electric utilities in Turkey are burdened with $47 billion debt of which up to $13 billion are at risk of defaulting. Before the end of this year, loans worth some $10 billion, mostly for gas-fired power plants, will need to be restructured, the Banks Association of Turkey (TBB) warned.

Rising dry gas production in the United States will be sufficient to meet demand for power generation and exports at a lower price than forecast. With this assement, the U.S. Energy Administration (EIA) lowered its Henry Hub spot price forecast for 2020 by 20 cents to an average of $2.55 per million British thermal units (mmBtu).

Northwest European near-curve gas prices have fallen in recent days. With the TTF Oct-19 trading as low as 3.86 $/mmbtu, this low price drives up demand for LNG shipping to higher-priced markets in Asia. Energy Aspects says the TTF Oct-19 contract has already priced in much of the incremental demand from the power sector switching to gas from coal.

Nearly 16 gigawatt of utility-scale gas power generation has been added in Florida between 2008 and 2018 – the most in any U.S. state. The share of natural gas in Florida’s energy mix surged from 47% to 72%, and EIA analysts anticipate gas-fired generation will continue to displace less cost-competitive plants fuelled by coal and petroleum liquids.

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News in Brief

MHI-MME to take over turbocharger production

Sept 20 – Mitsubishi Hitachi Power Systems will no longer produce MET turbochargers, the standard worldwide exhaust gas turbochargers used in stationary engines. Starting from January 1, 2020, these devises will be produced by Mitsubishi Heavy Industries Marine Machinery & Equipment (MHI-MME) instead.

Japan starts electricity futures trading

Sept 19 – Tokyo Commodity Exchange (TOCOM) has launched trading in electricity futures to advance price competition in Japan’s liberalized energy market. The East Area peakload electricity contract for October delivery first traded at 10.9 Yen per kWh, lower than the standard price of 11 Yen set by TOCOM in advance.

Duke to reduce rates in 2020

Sept 18 – Duke Energy Florida (DEF) customers will see lower bills in 2020. The utility filed a proposal with the Florida Public Service Commission to reduce rates for electricity and gas by more than 3% while adding more solar power and making grid improvements.

Myanmar approves three power projects

Sept 17 – Myanmar’s Ministry of Electricity and Energy has given the green light to plans for a 1,230 MW gas-fired power plant in Kanpauk, Taninthayi region, a 377 MW gas-fired unit in Ahlon, Yangon region and a 1,390 MW thermal plant in Milaunggyine in Ayeyawady region. The conflict-ridden country is currently producing electricity from 5,600 MW installed capacity, derived both from state- private-owned power stations.

Bonny Train-7 to cost $6.5bn

Sept 16 – Nigeria LNG is preparing to add a seventh processing train to Bonny LNG, bringing total capacity from 22 million tons per annum (mtpa) to 30 mtpa. Estimated to cost $6.5 billion, Bonny Train-6 will include a new liquefaction unit, a storage and a condensate tank as well as three gas turbine generators.

Schneider to complete L&T takeover by early 2020

Sept 13 – Venturing into India, Schneider Electric hopes to finalise the Rs 14,000 crore acquisition of Larsen & Toubro's electrical and automation business by early 2020. After the transaction is completed, Schneider will have a 65% stake in L&T, while the remainder will be held by Temasek.

MHI to advice China on energy conservation

Sept 12 – Mitsubishi Heavy Industries Thermal Systems, part of MHI, has set up a joint venture withan affiliate of State Grid Corporation of China (SGCC) to perform technical consulting for energy conservation projects in China. The focus of SGCC lies on building new decentralized power stations, biomass-derived power gensets and energy saving solutions.

Tender extended

Sept 11 – Turkmengas has extended a tender for the overhaul of the gas turbine engines of the NK-12ST and NK-14ST brands. Bidders need to pay to receive the tender documents, and then submit a written application to Turkmenistan’s state gas company.

Gas power units to buffer Germany’s coal exit

Sept 10 – Electricity output of Germany’s fleet of gas-fired power plants has risen to a over 13,5 billion kilowatt-hours in the three months from June to August, Fraunhofer ISE figures show. These productivity gains put CCGTs in pole position to balance supply swings in connection with the German coal exit.

Power of Siberia gas flows to start on Dec 1

Sept 9 – Russian gas supplies to China via the eastern route are going to start on December 1, 2019, Gazprom chairman Alexey Miller told his counterpart at CNPC in Beijing. The huge Chayandinskoye field, containing some 1.2 trillion cbm of gas, had already been connected to the 38 Bcm per year ‘Power of Siberia’ gas pipeline in August.

Hurricane Dorian causes havoc in the Bahamas

Sept 6 – In the aftermath of Hurricane Doran, a Category 5 storm, Bahamas Power and Light has said there is a total blackout in New Providence, the most populous island of the archipelago. Dorian made landfall twice on Sunday, ripping off roofs and electricity lines. In most parts, electricity has not been restored.

LNG cargoes via Bab-el Mandeb decrease

Aug 30 – Northbound LNG shipments via Bab el-Mandeb, a sea route chokepoint between the Horn of Africa and the Middle East, have fallen over the past three years as Egypt imports less natural gas from the Persian Gulf. In 2015 and 2016, both Jordan and Egypt imported up to 1.4 Bcf/d of LNG into Red Sea ports but these shipments fell sharply following the development of large gas finds in the Mediterranean.

Hokuriku Electric buys LNG cargo

Aug 29 – Japanese utility Hokuriku Electric has purchased an LNG cargo for delivery in November as soaring temperatures drew down gas in storage for the autumn. The cargo is understood to be scheduled for delivery in the second half of November from Malaysia’s Petronas and may well be destined for Hokuriku Electric’s first LNG-fired power generation unit,  the Toyama Shinko plant.

Technip spins off LNG activities

Aug 28 – TechnipFMC, has decided to spin off its European-based engineering and construction operations into a separate business, leaving the American half of the firm as an equipment supplier to the oil and gas sector. The split is due to be completed in the first half of 2020.

FLNG power market to top $930m by 2023

Aug 27 – The global market for floating LNG power vessel is projected to reach $ 931.6 million by 2023, up from $ 860.1 million seen last year, according to ReportsnReports. Major vendors of FLNG power vessels are Siemens, MAN, Wärtsilä, Caterpilar and GE which are targeting to use the technology to supply decentralized power to island nations in Southeast Asia and along the coast of sub-Saharan Africa and the Americas.

EIA monitors grid hourly

Aug 26 – The U.S. Energy Information Administration (EIA) has launched a beta release of its hourly electric grid monitor. The enhanced version analyses hourly generation by energy source and hourly sub-regional demand for certain balancing authorities in the Lower 48 states.

Hiroshima waste-to-energy plant gets upgrade

Aug 23 – Mitsubishi Heavy Industries (MHI) has been chosen to upgrade and refurbish the combustion facilities at a waste to energy plant in Hiroshima. The Naka plant in Minamiyoshijima, Naka-ku, has a total waste treatment capacity of 600 tonnes per day and generates 15.2 MW of electricity to power the equipment in the factory, while selling the remainder to the grid.